Comply or Be Caught

As for self-reporting requirements, the Provisions for the Reporting of Relevant Personal Matters by Leading Cadres, issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council on July 11, 2010, state that personal property reports are currently limited to officials at the deputy level at the county division level and above, as well as certain senior management members of state-owned enterprises. Other cadres are not yet subject to self-reporting requirements.

3.  Which industries have been most subject to scrutiny or investigation by the authorities?

(1)          The financial sector: Since 2016, and particularly during the first half of 2017, the People's Bank of China (PBOC), China Banking Regulatory Commission (CBRC), China Securities Regulatory Commission (CSRC), and China Insurance Regulatory Commission (CIRC) have issued a series of policies aimed at guarding against risks and intensifying financial regulation. The recent finance regulations not only raise the threshold for access by institutions—in terms of bank wealth management, establishment of fund subsidiaries, and the establishment of principal guaranteed fund products—but also strengthen regulatory restrictions on the “thoroughfare” and fund-pooling businesses in asset management, and heavily emphasize financial product innovation and banking asset quality.

(2)          The internet sector: The government has deemed cybersecurity and information development to be national interests. With the goal to improve top-level design and boost legislation in order to protect fair competition and security online and regulate internet innovation, the authorities have released series of policies and measures to promote data consumption and regulate the internet economy. For example, a number of network platforms recently were hammered for failing to carry out the procedures for a Permit for the Communication of Audio and Visual Programs via Information Networks.

4.  What is your advice to companies for maintaining compliance and proper commercial conduct?

Companies must comply with:

(1)    the laws and regulations issued by the state;

(2)    the rules, regulations, and trade practice of the industry association;

(3)    the enterprise's internal management rules and regulations, such as the employees' code of conduct; and

(4)    principles of social ethics and morality, and establish a corporate culture to guide employees when laws, regulations, industry rules and internal rules and regulations are unclear.

Companies are also advised to:

(1)    establish and maintain a sound internal corporate governance structure and stable internal control mechanisms; and

(2)    ensure both managers and employees are aware of the rules, and instill a sense of social responsibility in the enterprise itself.

5.  What impact does the new “Two-invoice System” have on compliance for pharmaceutical and distribution companies?

The “Two-invoice System” refers to: the issuance of an invoice by the drug manufacturer to the distributor, and the issuance of an invoice by the distributor to the medical institution. Pharmaceutical production and distribution companies are required to issue a dedicated value-added tax invoice or ordinary invoice, and the names of the buyer and seller on the invoices must be consistent with the outbound delivery order, as must the payment direction and amount.

Issues such as invoice borrowing, invoicing fraud, and artificially inflated drug prices had long plagued the complex and sprawling pharmaceutical distribution network, which was difficult to monitor. The Two-invoice System starts from the distribution sector and removes the middleman. With only two transactions and invoices between the drug manufacturer and the hospital, the tax authority can identify price increases on each invoice, as well as uncover and crack down on non-compliant issuances of invoices in a timely manner.

Pharmaceutical enterprises are advised to strengthen their management of invoices, documents, information, and vouchers, as well as review the relevant qualifications of suppliers and the lawfulness of the purchased products.

6.  Can you describe the standard internal compliance program for a typical MNC in China?

First, the company has a sound corporate file management system, such that all issues encountered in day-to-day operations and handed over to the legal department are recorded in writing and placed on file.

Proceeding in this manner facilitates an understanding of the specific circumstances, regular reporting by the legal department to higher-level departments, and a swift handover in the event that external counsel becomes involved.

Second, there is a clear division of responsibilities and authority within departments. For instance, the legal department would delineate contract review, litigation management, intellectual property protection, and investment/financing. Legal should actively participate in and promote the revision and formulation of internal rules and regulations so as to enhance inter-departmental cooperation.

Third, the company dynamically tracks the status of domestic and foreign legislation in relevant sectors and regularly conducts internal legal training.

Fourth, it examines and evaluates the legal risks involved in its day-to-day business operations and internal governance.

Lastly, it assesses and evaluates the work of, and offers incentives for, legal department employees.

7.  What are the administrative and reporting duties foreign companies must comply with once they are operational?

The first thing a company must pay attention to is submitting its annual corporate report for the previous year by the end of June each year. If it fails to do so, it will be placed on the irregular operations list, which will have an adverse impact on its day-to-day business.

When there is a change in its basic particulars (name, registered capital, scope of business, etc.), a company must carry out the procedures for record filing (or examination and approval) and business registration amendments in a timely manner. Since October 2016, many items previously subject to examination and approval are now subject to record filing, simplifying the process for the commerce authority.

A company must promptly update or renew its term of qualification upon expiry. The types of qualifications and certificates for which an enterprise is required to fulfil for these procedures are numerous. They could include, for instance, an industrial product production permit, hazardous chemical transport permit, construction qualifications, CCC certification and quality system certification. These are often mandatory for a company to carry on its day-to-day operations.

8.  What are the major data and employment aspects to take into account during internal investigations?

Companies must pay particular attention to their:

(1)   number of employees and turnover, as well as categorized statistics on the employees: work-related injuries, occupational diseases, sick leave, etc.;

(2)    work safety management data, to prevent safety-related accidents;

(3)    environmental monitoring data, to prevent environmental contamination incidents;

(4)    if import/export trade is involved, the HS code classification and the status of tax filings, to prevent violations of customs regulation;

(5)    operational and financial data, to prevent tax administration violations;

(6)    procurement department and asset disposal department, to prevent misappropriation of company property; and

(7)    technology research and development department and sales department, to prevent disclosure of trade secrets.

9.  Can you provide some practical tips for legal teams to take during investigations?

The focus of the investigation must first be clearly stated, and notes should be taken when interviewing key personnel.

If a suspected violation or crime is discovered in the course of an investigation, attention must be paid to gathering evidence.

Companies should also retain the information obtained during each investigation for future reference and, when necessary, seek the assistance of external counsel and judicial authority.

10.  In-house compliance teams are beefing up. What challenges do they face in the upcoming year?

Responding promptly to changes in domestic and international laws and policies is a challenge for companies. For example, the recently implemented PRC Cybersecurity Law and the complementing Measures for Security Assessments of the Transfer of Personal Information and Important Data Overseas (Draft for Comments) place more stringent requirements on enterprises' data and information management compliance. This also requires a company's compliance department to strengthen the integration of internal resources and to potentially cooperate closely with the authorities.

Public/listed companies are advised to place greater emphasis on corporate social responsibility. If the performance requirements for enterprises' environmental obligations are made stricter, their information disclosure pressures will rise. The fight to crack down on and prevent commercial corruption is only expected to intensify.

Wei Wang, Senior Partner

Co-effort Law Firm

Wei Wang specializes in legal services for foreign and domestic investments. He has provided comprehensive legal services for more than 100 Japanese listed companies investing in China, and advises foreign-invested enterprises on their establishment, M&A and due diligence.

Mr. Wang is one of the few specialized lawyers in China engaged in legal services for Japanese investment. His services cover foreign investment industrial policies, corporate establishment, foreign-related M&A, foreign exchange control, customs supervision, labor disputes, import and export of technologies and debt recovery. He also works with well-known domestic asset management institutions on onshore financing, investments and acquisitions.

Mr. Wang is the special consultant for the Organization for Small & Medium Enterprises and Regional Innovation, Japan and has been awarded as one of the Top Ten Young Lawyers in the Pudong New Area of Shanghai.

1. 去年有哪些重大的案件，反映中国持续的反贪腐？

根据《中国纪检监察》杂志的报道数据，自中国共产党十八大以来，已有超过250名中管干部被查处，仅2017年上半年就处分省部级干部38人，厅局级干部1000余人。这其中，最能体现中国持续打击腐败和受贿的案件有：周永康、薄熙来、郭伯雄、徐才厚、令计划、苏荣案件，上述官员中部分官至副国级；最高人民检察院2016年工作报告指出，2016年检察机关立案侦查职务犯罪47650人，其中原县处级干部2882人、原厅局级干部446人。依法对王珉等21省部级干部立案侦查，对令计划、苏荣、白恩培等48名原省部级以上干部提起公诉。此外，中央还坚决查处了山西系统性塌方式腐败，湖南衡阳破坏选举案、四川南充贿选案、辽宁拉票贿选案等震惊全国的大案。

2. 有哪些反贪腐的法规？有什么罚则和自我申报要求？

在中国，目前调整腐败和贿赂的法律有《中华人民共和国刑法》、《中华人民共和国反不正当竞争法》。此外，最高院于2016年4月18日发布了《关于办理贪污贿赂刑事案件若干问题的解释》。对于相关腐败及贿赂犯罪，刑事处罚措施包括拘役、有期徒刑、死刑，同时可以并处财产刑，包括罚金和没收财产；针对商业贿赂，《中华人民共和国反不正当竞争法》规定了行政处罚措施，行政处罚可包括罚款1万至20万元人民币并没收违法所得。

关于自我申报要求，根据2010年7月11日由中共中央办公厅、国务院办公厅发布的《领导干部报告个人有关事项的规定》，目前自我财产申报仅限于县处级副职级别以上的领导干部及部分国企的领导班子成员，对于其他群体尚无自我申报要求。

3. 有哪些行业是最受到政府机关的监控和调查？

(1) 金融业

自2016年以来，特别是2017年上半年，中国人民银行、银监会、证监会和保监会等密集出台政策，意在防范风险，加大对金融监管力度。本次金融监管不仅在包括银行理财、基金子公司设立、保本基金产品成立等方面抬高了机构准入的门槛，还对资产管理业务中的通道业务、资金池业务加强了监管限制，并且在金融产品创新、银行业资产质量等方面给予了重点关注。

(2) 互联网

自从国家将网络安全和信息化发展视作国家利益，意在完善顶层设计，推动立法，从而维护互联网的公平竞争与安全，规范互联网创新以来，政府部门出台了一系列促进信息消费、规范网络经济的政策措施，如不久前就有很多网络平台因未办理《信息网络传播视听节目许可证》而受到冲击。

4. 对于企业合规和正当商业行为，您有什么建议？

需从以下几个方面考虑：

1. 遵守国家颁布的法律法规，这是公司合规经营最基本的要求；
2. 遵守行业协会规章制度、交易惯例。这是合规的基本特征之一，不仅要守法，也要遵守行业规则；
3. 遵守企业内部的管理制度。这也是合规的基本特征之一，员工守则等内部规章制度是对员工进行奖惩的重要依据；
4. 遵守社会伦理、道德，建立自己的企业文化。企业文化是企业的灵魂，在法律法规、行业规则及内部规章制度不明确的情况下，企业文化能有效地指导员工的言行举止。

基于上述几个层次，对于企业来说需要从以下二方面努力：

1. 企业内部拥有完善的公司治理结构，以及稳定的内控机制；
2. 企业的管理者、员工均有规则意识；企业自身有社会责任感。

5. 新的“两票制”对于药品生产和流通企业有什么影响？

“两票制”是指药品生产企业到流通企业开一次发票，流通企业到医疗机构开一次发票。要求药品生产、流通企业销售药品按照发票管理的有关规定，开具增值税专用发票或者普通发票，发票的购、销方名称应当与随货同行单、付款流向一致、金额一致。

在此以前，医药流通过程中长期存在走票、过票，药价虚高等问题，流通环节多且复杂，监管困难。 “两票制”从流通领域入手，把环节压缩，中间的水分大大减少。药品从生产厂家到医院，医院进的是什么价，卖的是什么价，中间过程开两票，税务部门能够看到每一票到底加了多少价。有利于及时发现违规的开票，并予打击处理。通过推行“两票制”，未来会有一些不规范的企业面临淘汰。

建议医药企业关注以下几方面问题：1、加强发票管理；2、重点审核供货单位的相关资质及所购药品的合法性；3、加强文件资料及凭证管理。

6. 您认为对于一家在华的典型跨国企业，标准内部合规制度应该是怎样的？

首先是完整的公司档案管理制度，对于公司日常经营过程中遇到的移交给法规部的问题，都能整理成册，立卷归档。

这样既便于后来者了解公司情况，也便于法规部定期向上级部门做汇报，也便于当外部律师介入时，能迅速的完成交接。

其次部门内部有明确的分工和权限。包括公司日常经营合同审核、诉讼管理、知识产权维护、投融资等项目法律事务等。同时，法规部应积极参与并推动公司内部规章制度的调整与制定，进而更好的协调各部门工作。

然后是对国内外相关领域立法情况的动态跟踪，定期开展内部法律培训。

此外是公司日常经营业务及内部治理所涉及法律风险的检查与评估。

最后是法规部员工的工作考核评价与激励。

7. 外资企业运营后，有哪些行政报告责任？

首先要注意的是，应在每年6月底之前提交上年度的企业年报。如果未能按时提交年报的，将被纳入经营异常名录，对公司的日常经营造成不良影响。

在公司基本信息（名称、注册资本、经营范围等）发生变化时，应及时办理备案（或审批）、工商变更登记手续。 2016年10月起，原先很多需要审批的项目变更为备案制，简化了商务部门的审批流程。

公司的各项资质期限届满时，应及时办理更新续期手续。企业需办理的资质及证书种类繁多，如工业产品生产许可证、危险化学运输许可证、建筑资质，CCC认证、质量体系认证等。这些资质通常是公司开展日常经营的必要条件。

8. 内部调查时，有哪些主要的数据和人事因素是需要注意的？

1. 公司的从业人员人数、离职率等，并对从业人员分类统计:工伤、职业病、病假等；
2. 安全生产管理数据，防止安全生产事故的发生；
3. 各项环境监测数据，预防环境污染事故的发生；
4. 涉及进出口贸易的，需关注海关HS编码的归类及纳税申报情况，防止违反海关监管行为的发  生；
5. 了解公司经营财务数据，防止违反税收征管行为的发生；
6. 重点关注公司采购部门及资产处置部门，防止非法侵占公司财产行为的发生；
7. 加强对技术研发部门、销售部门的监管，防止泄露公司商业秘密行为的发生。

9. 对于现场监督调查，企业及内部法律团队应采取的最佳处理方法是怎样的呢？

内部调查时，应首先明确调查重点，对关键部门的重要员工进行访谈时，应做好记录。

调查过程中，发现有违法犯罪嫌疑的，应注意有意识地搜集调查证据。

将每次调查获得的资料保管备查。必要时，可以寻求外部律师及司法机关的协助。

10. 内部合规团队正在扩张。来年他们将会面对什么挑战？

需对国内及国际法律政策的变化做出及时的应对。如近期实施的《网络安全法》，及作为新规配套的《个人信息和重要数据出境安全评估办法（征求意见稿）》，对企业数据信息管理的规范性提出了更高的要求，这也要求企业合规部门加强企业内部资源的整合，同时也许进一步增加与外部评估监管机构的合作。

对于不断对外扩张的公众公司而言，更需要关注企业的社会责任。如企业履行环境责任的要求更高，上市公司信息披露的压力更大，打击和预防商业腐败的力度更大。

王炜 高级合伙人

协力律师事务所

王炜律师专注于涉外投资及国内投资法律服务，已先后为上百家日本上市公司在华投资提供法律服务，业务内容主要涉及外商投资企业设立、并购、法务审慎调查等。

王炜律师是中国律师中较为少有的从事涉日投资法律服务的专业化律师，其外商投资法律业务涉及了外商投资产业政策、公司设立、外资并购、外汇管理、海关监管、劳动纠纷、技术进出口、债权回收等相关领域，法律服务深度和广度皆非常出色。

在涉外法律服务活动中，王律师与众多日本知名律师事务所、专利商标代理等专业机构保持着良好的合作关系，能够为日本企业在中国的投资活动提供全方位的法律服务。同时，王律师亦与国内知名资产管理机构合作，积极参与国内融资、投资及收购活动。

王律师是日本国独立行政法人中小企业基盘整理机构专家顾问，并曾获颁上海市浦东新区十大杰出青年律师新秀奖。